Broker tips Aristocrat Leisure (ASX:ALL) share price to keep rising

Can this gaming company's shares keep rising?

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The Aristocrat Leisure Limited (ASX: ALL) share price is trading lower on Friday.

In morning trade, the gaming technology company's shares are down almost 1% to $46.86.

While today's decline is disappointing, it isn't enough to take the shine off its 2021 performance.

Since the start of the year, the Aristocrat Leisure share price is up ~50%.

4 teenagers playing mobile game

Image source: Getty Images

Where next for the Aristocrat Leisure share price?

This morning the team at Goldman Sachs gave their verdict on the Aristocrat Leisure share price.

This follows the company's virtual investor round table event ahead of the start of its new financial year next month.

However, while the broker has retained its buy rating, its price target of $48.60 implies only modest gains ahead.

What did the broker say?

Goldman's analysts appear to have come away from the event feeling confident in the company's growth outlook.

In respect to its poker machines business, the broker commented: "Management highlighted the strength of its land based business where it continues to take share in its core markets, as evident in some recent surveys and noted ~3x floor avg across premium games."

It was a similar story for the company's Digital segment, which continues to perform strongly.

Goldman said: "Generally, RAID continues to scale albeit not at the same rate as a year ago, whilst Evermerge remains attractive and Mech Arena just launched globally in August and is now scaling. They remain focused on not just top line growth but profitable growth, noting that the group continues to grow above industry levels off organic drivers over the past two years rather than boost from acquisitions."

Aristocrat Leisure also spoke about potential M&A activity, noting the strength of its balance sheet.

Its analysts explained: "Balance sheet strength remains, and management continues to watch M&A closely as an option to accelerate growth like they have in the past, though highlighted their discipline on this front including criteria that it needs to be accretive from day 1 and fits in and allows the group to scale the acquisition."

All in all, Goldman appears happy with what it heard and continues to forecast strong earnings growth in the coming years. For example, the broker has pencilled in earnings per share of $1.30 in FY 2021 and then $1.69 and $1.91 in FY 2022 and FY 2023, respectively.

Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia's parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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